Saturday, November 21, 2015

Travels and thoughts Nov 21

Last week I was in Mato Grosso.
I am not impressed with soy crop.

I was to Brasilia this week. Many fields to be
planted yet in Goias.

Next week I will be in Southern Goias- stay tuned.

The soy crop is super late with below normal rains.

Parana and Mato Grosso do Sul are being hammered by rains.
Rain makes grain.
Will there be rust? Sure- there is always rust.
Spray fungicides and spray them again. Three applications are normal
these days.

We seem to get rain about once a week. Not everyday as per normal this
time of year.

In Mato Grosso, last week, good to excellent fields were from 10-15% of the
total area.

Reports out of Sorriso county last week of producers switching 1st crop
soy area to a 1st and only crop of corn.
This has never happened before.

We are dealing with a Mega El-Nino. It got stronger yet last week
from what I read.

The last big El-Nino was back in 1997.

Back in 1997 Mato Grosso planted 2 million hectares of soybeans with a yield
of 2.7 tons/ha. Today Mato Grosso plants 9 million ha with yields of 3.1 tons/ ha +.

Back in 1997 Goias produced 1 million ha of soybeans with yields of 2.5 tons.
Today Goias produces 3 million ha with yields of 3 tons/ha.

Tocantins back in 1997 produced Zero soybeans. Today the state plants 850,000 ha
and has yields of 3 tons/ha also.

If we go back to a previous El-Nino, we do not have any data to work with.

Bottom line to all of this. The crop is basically planted. The crop is young.
Harvest will be in March and April in many Cerrado states for 2016.

I have told clients that I do not think we have a 100 million ton crop on the way.

With Argentina ready to sell 10 million tons of soybeans, we are at a Mexican standoff
in the marketplace. Brazil is mildly bullish today. Argentina is mildly bearish today.

Does Brazil have the potential for a 10 million crop loss this season so far? No

Thus, until we have data supporting significant losses, we tread water it seems.

We need to burn up some carryover stock potentials in the coming months in order
to get optimistic again.

Dry January and a dry April/May 2016 would have the markets attention for both soy and corn.

I will be in Mato Grosso the end of March for the Show Safra 163 ag show.
This ag show is growing fast.


Saturday, November 7, 2015

Nov 7 blog Where is the rain?

It just can´t seem to rain like normal. We had some nice showers last weekend. Then it turned dry again.

I am headed to Mato Grosso this week. We have a tale of two worlds again. We talked about this last year but the rains started Oct 22 and continued normally. This year we have soybeans that are soon 45 days old and look good. We have soybeans that are 25 days old and need to replanted. We have vast areas not planted yet. Specifically Goias and the NE 1/4 of Brazil. Planting now will be considered late in these regions.

I am waiting for November 15th before I start to call this soy crop smaller than what is in the media today. There is still a chance things can correct and we have a late planted record soy crop and a very at risk 2nd crop corn. With Mato Grosso receiving above normal rainfall the past FIVE 2nd crop growing seasons, our memories tend to get short sided and we forget what "Can happen".

Brazil is pumping out all this extra corn at a record pace. 28.8 million tons for Nov 1, 2014- Oct 31 2015. Some say that for calender 2015, Brazil corn exports will be above 30 mmt.

Petrobras workers have been on stike this past week. Interupted total oil production for the week is about 800,000 barrels. Not a big deal on the global oil market, but needs to be watched if this continues a week or two- moreso for Brasil domestic energy markets.

Truckers plan to strike again on Monday. Let us see if they can make something stick this time.
It seems to take about 2 weeks for shortages to start showing up in the supply chain of various products.
With enough of these disruptions, this will eventually bring government to thier knees. There will not be enough fire trucks to keep all the fires out.

Currency market has been controlled again in recent weeks. Central bank is crapping in their pants that USA raises interest rates in December. It puts the Brazilian Real in a no win scenario. They cant keep ahead of inflation and budget concerns.

More movement this past week on the proposed rail project for Northern Mato Grosso up to the Amazon river system and then barge soy, corn, and meal further up the Amazon for loading of Panamax ships.
This would be a boon for the region. I still have my doubts as per the short term practicality of such projects given that government can´t even pay contractors for work that has been done on other roads and rail roads this year. If the multi-national grain companies and China could get together and float this project without Brazilian government intervention, this thing could have legs in the next year or two.
But as we have seen, when has Brazilian government ever not obstructed progress? They don´t even have the statesmanship to resign when clearly they are not working in the publics best interest.

Bottom line to all of this:

I am not sounding the alarm bells quite yet. With current weather patterns, I will sound the yellow alert after Nov 15th. Soy production will be at risk and 2nd crop corn at great risk. At the moment Parana is the "Garden of Eden" and well on the way of producing 18 mmt alone. Will Mato Grosso come in at 29 mmt as per expectations? and 20 mmt of 2nd crop corn? With this pattern we have today- no way-
If it rains cats and dogs Nov 15th- Jan 15th, we still have a chance on seeing Mato Grosso blow us away with yet another record, but my antennae is up!!!!